Changes to Harmonized Sales Tax in New Brunswick
New Brunswick has increased its Harmonized Sales Tax from 13% to 15%, effective July 1, 2016. The rate hike is related to an increase in the provincial portion of HST from 8% to 10%. To offset the extra expense for low-income families, the province has introduced several HST credits.
Harmonized Sales Tax
HST is a special type of sales tax that harmonizes Canada’s federal goods and services tax with provincial sales tax. In April 1997, New Brunswick became one of the first provinces to implement HST, and to date, several provinces have followed suit. Areas without HST use GST and PST, while a handful of areas including the Yukon, Northwest Territories, Nunavut, and Alberta only assess GST.
HST, GST, and PST are all applied to the sale of taxable goods and services. For example, if you buy a taxable item for $100 in New Brunswick, you pay $15 in HST. That makes the total price $115. When HST was 13%, this same item would have cost $113.
Although the increase is relatively insignificant, the province believes the cost may affect some working families. To help, New Brunswick offers provincial HST tax credits. Additionally, to offset the cost of sales tax for key industries, the province also maintains several HST rebate programs.
New Brunswick’s HST Tax Credit
The provincial tax credit is worth a maximum of $300 for an individual, $300 for a spouse and $100 per
child under the age of 19. If you are a single parent, you may be able to claim $300 on behalf of one of your children, as you are not claiming the amount for a spouse. For example, if you are married with three children, you may receive a rebate worth up to $900. That consists of $300 each for you and your spouse and $100 for each of your children.
To be eligible for the HST tax credit, you must be a resident of New Brunswick and file a tax return. The
amount of your credit is based on your provincial net income as noted on your tax return. Families with incomes less than $35,000 qualify for the maximum amount of the credit. Past this income level, the province offers partial HST credits to individuals with up to $50,000 in income as well as to two-parent, two-child families earning up to $75,000.
Receiving the HST Tax Credit
If you qualify for the HST tax credit, the Canada Revenue Agency sends you the credit with your GST credit. If your credit is more than $200, you receive the payments in quarterly installments, and if your payment is less than that amount, you receive it annually. For instance, if your family qualifies for a $900 credit, you receive a $225 payment every quarter. However, if you only qualify for $150, you receive that amount in a single annual payment.
In October 2016, recipients received a double payment to cover the period running from July when HST was increased to December. However, as of January 2017, credits are scheduled to be paid as usual.
Applying for the HST Tax Credit
As of 2014, you no longer have to apply for GST/HST credits. Rather, the Canada Revenue Agency gives you credits automatically based on the information in your tax return. To ensure the government takes your children into account, you may consent to the Automated Benefits Application service on your child’s birth registration form or apply for the Canada child benefit on behalf of your child. You can use Form RC66 to apply for the CCB.
If you recently moved to Canada and have not yet filed a tax return, you may apply for the GST/HST tax credit by filling out Form RC151, GST/HST Credit Application for Individuals Who Become Residents of Canada.
Provincial Tax Rebates
In addition to offering the HST tax credit to families, the province also offers a number of other credits and refunds. When shoppers in New Brunswick buy books, audio recordings, and scriptures, they pay the 5% federal portion of HST but don’t have to pay the 10% provincial portion. This rebate is processed by the seller at the cash register.
When universities purchase properties or supplies for research and development, they may apply for a rebate of the provincial sales tax paid on those items. Qualifying institutions may apply with Form HST-R-02, but they need supporting documentation and receipts.
If you purchase a vehicle designed to transport wheelchairs or scooters, or a vehicle with auxiliary driving controls, you may also use the same form to claim a rebate on New Brunswick’s 10% sales tax. However, you cannot use the vehicle for commercial purposes, and you may not claim any additional rebates on the purchase.